Running your company places constant demand on your time and energy, and creating a strategic plan for your business, with periodic revisions, is often neglected. A poorly conceived or nonexistent strategy can result in stagnant or declining sales and profits.
A strategic plan is not a static document that you create and file away. Volatility has increased in every industry due to the stress of these economic times, so flexibility in business is essential to success. Once you have created the plan, it just takes two or three hours every six months to review the soundness of your plan and evaluate the need to revise it due to significant changes in market dynamics. One reason to review your plan is to see how technological advances in products and services can be incorporated, and to identify what new competitive challenges could threaten your company’s sales and profits.
Components of a strategic plan consist of market target(s), product/technology/ service development, competitive environment, revenue, operating and overhead expenses, marketing, sales, and staffing. Consider how each piece works within the strategic plan for your company:
Identify the uniqueness of your product, technology, or service. Describe how it distinguishes your company from the key competition in the market. Next, identify the underserved segment or segments and the size each represents in number of customers and sales revenue. This can be achieved by in-depth analysis of the demographics of existing customers, or by conducting market research among existing and potential customers. If you choose to do market research, be certain to probe for why subjects would choose your company rather than competition. Do not settle for surface responses, but instead, keep digging for nuances or subtleties that can lead to a competitive advantage. Depending on the size and scope of the research you can fund, recognize the projectability of the research and its limitations.
Qualitative research is extremely valuable, even if the data is not statistically significant. The findings can serve as a valuable guide and will add to your management knowledge and market insight, and can also be utilized as support for your projections. Many companies have a tendency to overstate potential customers and resulting sales revenue to justify investment funding. It is quite common to make this error in strategic plans, but you must be able to demonstrate the soundness of your strategic thinking and projections. If you begin to miss your numbers due to overestimation, existing or potential investors will quickly lose confidence. Or the opposite dynamic can occur: when growth surpasses projections, the funding sources might be hesitant to add to existing funds if strategic plans do not clearly identify the new operating expenses and capital required to take advantage of these growth opportunities.
The plan should address competitors and their products, technology, or services as they currently exist. Include the strengths and weaknesses based on analysis or market research studies of the competition. Focus on the real or perceived advantages from the point of view of the customers who purchase their offerings.
In this section of your strategic plan, include anticipated improvements in their products, technology, or services based on your intelligence-gathering activities at trade shows, industry conferences, trade journals, and the like. Also, take note of the anticipated competitive reaction to your offerings. In the following “product development” section, refer to product and service upgrades.
A subsection of competitive environment is pricing. You should be able to justify your pricing and allow for price increases that reflect your competitive advantage. You also need to quantify the impact of a reduction in your pricing structure, which may result as your competitors defend their market share due to competitive pressure. It is best for you to be prepared for such challenges, since you can expect competitors will resort to some form of lower pricing if your company’s product(s) or service(s) are impacting their sales or share of market. This one step will distinguish your plan from the vast majority of strategic plans.
Address the development of your new or upgraded products, technology, or services that will sustain or improve your market advantage. Identify the current and future costs related to this new strategy.
Marketing: In this section, identify your marketing strategies, and focus on the creative communications, media, and promotion strategies. Address all of them, even if they rely on generally utilized media and promotions. Any element of uniqueness should be incorporated in this section, whether developed internally or by your advertising/communications agency.
Ben DeYoung is president of Ben DeYoung & Associates, a management and marketing consulting firm focusing on strategy, marketing, sales, and staffing.